Small companies adding value: the rise of microbrewing
When I wrote Future Inc: How Businesses Can Anticipate and Profit from What’s Next, I chose the future of beer as a case study to illustrate forecasting methodology. The reasons were many. Beer is a 5,000 year-old product, and not as tech-driven as information technology – so you can’t fall back on techno-optimism when thinking about its future. Still, beer is wildly interconnected: it encompasses agriculture, biotechnology, transportation, retailing, government regulation, cuisine, social impacts, and much more. Despite being simple, the changes in the beer industry are rich and interesting. Plus, beer is delicious.
One of the key forecasts I uncovered while researching the book was the rise of microbrewing. The major beer brands around the world were stalling while small, local and national operations were profitably targeting a small and growing segment of beer drinkers and nascent foodies.
Here we are four years later, and the trend has continued apace. This article in the St. Louis Post-Dispatch shows how even in the shadows of the now-Belgian owned Anheuser-Busch, microbrewing is taking off at mid-double digit rates while sales of the majors now dip.
One of the reasons behind this trend actually transcends the beverage market. In our research in the field of economic development, Competitive Futures has learned that the rise in local beers often coincide with resurgences of economic vitality. Local beers become a flag around which communities rally. It often becomes associated with “local success stories” of businesses started in someone’s garage, soon requiring real capital investment in manufacturing infrastructure and jobs with good wages. Local ingredients and traditions are incorporated; cultures are revered. In short, microbrews are successful because they create value on multiple levels – for shareholders, employees, municipalities, and of course, beer lovers.
Now, can large companies create value on this level? Perhaps only if they begin thinking in this superconnected way.
Forecasting works: Functional foods 1999 – 2009
by Eric Garland
Today, the airwaves are filled with advertisements for consumer foods that aren’t simply nourishing but portrayed as practically medicine. A slew of softdrinks are marketed as hangover cures, energy, memory enhancers, cognitive enhancers, help with clairvoyance, and fuel for flight. Fish isn’t just fish, it’s OMEGA-3 FATTY ACIDS. And somewhere along the way, trans-fats replaced “Ebola virus” as the world’s deadliest substance. Is this random or could you see it coming?
Food as medicine was a theme we predicted for 2010 way back in 1999 when studying the future of food and health for a group of global consumer product manufacturers. The world seemed to be at a turning point at that moment, with a number of trends appearing to collide in the decade to come:
- Super-size and family value packs had reached their apex, due to increasing penetration of fast food and big-box retail throughout the world
- Obesity epidemic reaching a pitch, not only in America but also in unexpected places like France, Greece, China
- Litigious American culture had finally apexed with its war on cigarette liability, and a new target was likely to be next
- Biotechnology was promising new technological abilities for all plant life (this was the era of the Human Genome Project and techno-positive rhetoric was off the chart)
- Boomers were aging, and increasingly interested in immortality on the cheap
- Sustainability was increasing as a concern, and farming would be one of the most effected industries
- The “Slow Food Movement” was beginning to point back to heirloom breeds of livestock and produce and encourage local diversity in favor of industrial solutions
Beer: Recession proof, harbinger of economic renaissance
by Eric Garland
Those of you who read Future, Inc. know my special love for beer. It’s a magical substance for oh, so many reasons, 
but among its many mystical properties is that it’s RECESSION-PROOF.
This is a simple local news story about a Carolina brewer starting a business in a down market. The punchline is that it’s almost always safe to start a business doing delicious craft brew beer, since sales of alcohol are the last to slump, and since the segment is still growing 14% a year.
One of the things we discovered about local beer was that it ends up being the flag for local economic recovery. So, neighbors out of work? Tough times ahead? Drink your local beer with your friends – it may be the signal of economic vitality right around the corner.
Obama tests Keynesian economics in 2009 – new hotness, or old and busted?
by Eric Garland
I thoroughly enjoyed the NPR segment yesterday entitled “Obama tests Keynes” in which a couple of young guys dig into the often-bewildering rhetoric of the economic stimulus package. Funny, relevant, and worth a listen.
It’s important that in this case it’s young journalists taking a fresh approach to the economic arguments of Baby Boomers. I don’t think the Boomers at the head of our institutions often recognize that the political ideologies discussed were born long before we arrived on the scene, and often have no connection to reality for Gen X & Y. The snarkiness between taxcutters and economic stimulators often generates as much deep-seated passion as comments about “Hanoi Jane” Fonda – it’s a reference to a fight that started well before our births, and may need minutes of explanation to even make sense.
Case in point: the radio program deals primarily with the multi-decade conflict between Keynesians, who believe that well-timed government spending can save flagging economies, and market fundamentalists who belief that the entire economy can be managed through tax cuts and manipulation of the interest rate. The Keynesians protest, “government spending led to winning World War II and got us out of the Depression!” Market fundamentalists tend to argue that the slump of the 1970s proved that it’s not a cure-all – and that only deregulation, tax cuts, and Greenspan’s masterful operation of the interest rates saved us from big government stagnation.
The radio program concludes by saying that after all the discussion about this once-in-a-lifetime event, the Obama plan is basically pure Keynesian economics. After this, we’ll be able to see once and for all if it works or if we were imagining it the 1940s. The exciting bit is, this may be the first verifiable test of classical economics!
This kind of thing makes me insane.
Here we are, heading straight into the meaty part of the 21st century, experiencing an economic emergency that could only be created by a combination of today’s special mix of globalization, Internet, post-hegemonic power vacuum, unchecked assumptions, and 6.8 billion people at an unprecedented moment in history. And the only topics our elites can discuss is:
“So should we spend a lot of money on credit or fool around with the interest rate?”
Every day, people wake up and turn on the television or radio or Web site of their choice and begin worrying about a select group of numbers that are forced at them daily. We hear these measures so often, people are mistaking them for important or relevant.
- The Dow Jones Industrial Average – a collective of large-cap equities, and the prices that Wall Street gamblers are willing to pay that day to take part in their eventual earnings
- Housing starts – the number of new suburban homes under construction, with the assumption that all human housing should eventually stretch to the planet Mars
- Consumer spending – The amount people spend on Guitar Hero and couches and other goods for their new suburban homes
- Interest rates – The rate at which money can be borrowed from banks to the Federal Reserve, to other banks, to people, through credit, through…oh cripes I have a master’s degree and still don’t really get it. Suffice it to say that the interest rate policy appears as logical as Aztec shamanism, and about as transparent as the election of the Pope
- Stimulus packages – The amount of fake money spent on real things, supposedly to be paid – with interest! – by future generations, who will repay this through all the fantastic, super-paying jobs that are right around the corner…so…uh…just let us retire in peace, um, and keep paying your taxes…
We follow these things excessively, and to the untrained eye, they don’t seem to be leading to better management of the world economy. In fact, the world has been managed exclusively through these kinds of measures, and our policymakers are stuck arguing on the radio about whether KEYNES got us out of the GREAT DEPRESSION using these numbers.
GUYS – CAN WE TALK ABOUT THE NEW STUFF HAPPENING?
U.S. manufacturing now resides in China. Our kids are in debt. The Internet is making new companies possible and other companies obsolete. Science and technology is rolling onward. This is probably just another phase of Kondratieff cycles or Schumpeterian creative destruction. We’re looking at a huge change of management between the Boomers and Gen X. The Boomers are going to start going to the doctor a LOT and will crush the private healthcare system. Mass media is about to go extinct. Europe is out of kids, while the average age of Iran in 24.
Now, how is it that the argument can still be down to deficit spending versus interest rate policy?
Here’s some new measure to try out on the TeeVee, just to inject a bit of new debate into the public sphere:
- The Gig Rate: Measure the percentage of people who just graduated with expensive student loans and got a job that pays for rent, food, and debt repayment
- The Grandma/Doctor Ratio: Percentage of grandmothers able to get to their doctors appointments as scheduled, not left at home, letting their prescriptions go out of date, because they can’t get transportation
- The Ebay Entrepreneur Stat: Number of cash flow-positive home-based jobs created through Internet technologies, allowing people to make money and still raise their kids
- The Youth Diabetes Drop: Number of young people diagnosed with Type II diabetes mellitus able to reverse their disease through diet and exercise, thus saving society billions in the long-run
- The Volunteer Volume: Number of people financially secure enough in their lives to donate time to a local charity, improving their communities at no cost to taxpayers
- The Revitalization Rate: Dollars generated through the repair of our natural and built environments, from wetland and waterways to city centers and school districts, creating economic prosperity while giving future generations even more opportunity
I don’t care if you use these – invent your own. Find a way of discussing economic prosperity in a way that doesn’t use these same, tired, busted statistics.
It’s time to leave John Maynard Keynes where he was: a Cambridge elitist who bounced around the London dinner party circuit, hating the working class and delivering all kinds of new, interesting ideas just for shock value. I think he’d be sorely disappointed in us if he thought that in 2009 we hadn’t moved past him, despite having gone to the moon, defeating communism, and inventing about 1000 new world changing technologies.
KEEP THINKING.
The food crunch looms over the credit crunch?
The Financial Times brings us another piece of sunny news, suggesting that financial disruption could cause world food prices to rise.
Since December, wheat prices have risen 15 per cent, corn 17 per cent and soyabean 22 per cent. In contrast with other raw materials such as oil or aluminium which have plunged back to the levels of 2002-05, agricultural commodities are trading higher than they were just 12 to 18 months ago.
Let’s not just focus on disaster, though: the most important aspect of this crisis is that it will spur nations to reform the production of food, where possible. It will appear increasingly clear to national leaders that globalized credit and food markets will lead to more instability than protectionism. Already we see East European governments being shaken up by citizens angry over the potential disasters. If these become hunger riots, the secondary implication will be a quick retraction of global markets. People will grow foods closer to home. Or in the words of Jim Kunstler, “the 3000-mile Caesar salad is OVER.”
About Eric Garland
Eric is one of the world's pre-eminent thoughtleaders in forecasting and strategy. He helps leaders of business and government make critical decisions about their futures.Connect with us
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